Under Armour running for profits

Company sees footwear as a prime market for growth

Under Armour Inc. is looking to pick up speed in the running community, after running products led its footwear category in the first quarter.

The Baltimore athletic wear maker reported significant increases in revenue and profits Thursday, and in a conference call with investors identified running as one of its major opportunities for category growth.

“Part of that confidence comes from the growing strength in the team we are building in running,” said CEO Kevin Plank. “We believe footwear has the potential to be larger than apparel for us.”

In the first quarter, Under Armour made two key moves in running. It released the SpeedForm Apollo shoe and hired a new vice president for running footwear, Fritz Taylor. Taylor has years of experience in the running industry, having previously held positions at Mizuno, Brooks and Under Armour’s behemoth rival, Nike.

“He will put them in the business, but it will take a lot of patience,” said Matt Powell, a member of Princeton Retail Analysis and analyst for SportsOneSource.

It takes years for a footwear company to gain credibility among runners, he said. The company must show consistency in its products, while allowing them to evolve and showing a commitment to the running community.

“It’s not the kind of thing that at the end of 2014 they’re going to say, ‘We’re now a full-fledged running brand,” said Powell.

Josh Levinson, owner of Charm City Run, agreed that it’s going to be a long journey.

“Things in the running specialty world move very slowly,” he said. “It’s hard to turn this ship.”

But he’s seen some promise for Under Armour since it released the Apollo. People tend to be more open to the brand in the Baltimore area, he said, but the new shoe seems to be especially popular among his staff and customers.

“People are buying it, they’re liking it. They’re sometimes sold out. Those things are a great sign that it’s gaining traction,” he said.

Under Armour also made a move toward the running community late last year, when it acquired MapMyFitness, a company that provides activity tracking online and through a mobile app for runners, walkers and cyclists.

Powell said he doesn’t see any immediate branding opportunity in the deal, but that it could help Under Armour to learn more about runners. Focusing on them will help the brand reach other athletes as well, he said, because football players and basketball players also have to run.

While runner loyalty will make that a challenge, it’s possible for the brand to penetrate the market, said Faye Landes, analyst for Cowen Group who follows Under Armour, and it’s been done before.

“Now you can also say Skechers, who most people, including me, would not (expect to) have a lot of credibility in running,” she said. But the brand was able to score an endorsement from runner Meb Keflezighi three years ago, and he just happened to win the Boston Marathon this week.

But even an endorsement isn’t enough on its own to propel Under Armour into the running limelight, she said.

“It’s not the kind of thing where you sign up one famous athlete and start blasting Super Bowl advertisements,” said Landes. “It’s a very kind of elbow grease, brick-by-brick kind of thing.”